HELP! Major hiring decision. Input needed.

Rental Property Investor from Lubbock, TX

posted 11 months ago

I've been in business for 2 years, and have reached the point where I've consistently been remodeling at least 2 homes at any given time. My average is 3 homes being remodeled for rental or flip at any given time. That number has gone up some, and next year I expect to average around 5 projects at once.

I've got all the training, contracts, software, etc. that I've been personally using all along, and allowing my property manager to use as they managed construction projects for me. They ARE the right person for my company, but after trying and training and trying and training, I need a new project manager, so the property manager can focus on tenants and selling houses.

SO--I've found a great candidate that has references and a track record that just blew me away. He is the real deal, and has completely turned around branches of companies by himself in a leadership position. He is absolutely an "A Player" who would add value to my company. BUT I feel a tremendous pressure to keep the projects coming in so that he would be worth the guaranteed salary that it would take to get him on board at the company.

I love incentivizing based on performance, but he is all about a guaranteed salary. He has over-delivered with every company he's been with in the past, BUT I am trying to brainstorm what other high value things he could do if I'm paying a salary...

from Austin, TX

replied 11 months ago

I have found in the past both as a employer and employee that a solid base with a quarterly bonus or commission tends get the most out of people. Finding the best balance between the two or all three is the key!

from Severna Park, Maryland

I love incentivizing based on performance, but he is all about a guaranteed salary. He has over-delivered with every company he's been with in the past, BUT I am trying to brainstorm what other high value things he could do if I'm paying a salary...

Ideas:

Manage construction projects for others

Lead Gen for sellers

Door Knocking Foreclosures

Ideas, advice, and all is appreciated.

Sounds like you cant afford him . If he is that good a guaranteed is what he needs . As far as finding other things for him to do , It sounds like you will need to find more properties to buy to keep him busy .

Flipper from Los Angeles, CA

@Matthew Paul . Sounds like its too early in your biz to hire the A Talent person. Go out and hire a part time Project Manager and test them out for 6 months...low salary..bonus structure...and then you can expand their hours and pay if it makes sense....always start small...then grow....let the business drive the expense.

Real Estate Investor from Encinitas, California

replied 11 months ago

@Austin Hughes So I think you're in between a "rock and a hard place" in that you want this new project manager because you expect your business to increase 66% next year (i.e. going from 3 to 5 concurrent projects). So if I'm in the PM there's an element of risk there because you're not doing 5 concurrent projects already. So he needs that base pay to offset the risk that you have the potential to collapse under the weight of 5 projects. Not to say that you will but it's likely going through his head.

I would argue if you DON'T keep bringing in deals and have him on a bonus-centric plan you should feel even MORE pressure? Why? He would leave if the deal-flow doesn't look like it will yield the bonuses that he's hoping for. If I'm in your shoes and you truly believe that he's an A-player then hire him. Pay him the base salary that keeps him engaged. I mean, if he's there then it should allow you to focus on bringing in those deals, right?

from Severna Park, Maryland

Not trying to brag or argue...just facts that go into the decision. Does your advice change knowing that or would you guys still say keep a low paid person who I have to manage a lot more?

Sometimes its easier and cheaper to groom and bring someone up from the bottom. You have more control . Teach them and let them grow with you .

Bringing in the rainmaker , its expensive . Honestly 5 or 6 flips a year yielding $ 25 to 40K wont be enough to pay an excellent person .

When looking to hire , I tell someone to work the numbers backwards . Starting with the new persons salary , and how much more they need to gross to afford that person . When they start running the numbers lots of time they realize to pay that person lets say $ 75K a year they have to increase their business 100% just to break even .

Rental Property Investor from Lubbock, TX

@Austin Hughes So I think you're in between a "rock and a hard place" in that you want this new project manager because you expect your business to increase 66% next year (i.e. going from 3 to 5 concurrent projects). So if I'm in the PM there's an element of risk there because you're not doing 5 concurrent projects already. So he needs that base pay to offset the risk that you have the potential to collapse under the weight of 5 projects. Not to say that you will but it's likely going through his head.

I would argue if you DON'T keep bringing in deals and have him on a bonus-centric plan you should feel even MORE pressure? Why? He would leave if the deal-flow doesn't look like it will yield the bonuses that he's hoping for. If I'm in your shoes and you truly believe that he's an A-player then hire him. Pay him the base salary that keeps him engaged. I mean, if he's there then it should allow you to focus on bringing in those deals, right?

I've done 5 at a time, but I'm talking about the average. That risk could be real for him, but the company hasn't and won't collapse under 5 projects. That's the max I could manage myself with everything else, which is virtually what I've literally been doing with my current Project Manager.

You're right about keeping him around. And it is a big responsibility for any employer to pay a man/woman to provide for their entire family! I don't take it lightly.

Yes sir if he does his job well, there will be plenty more deals :D That's where I think this ALLLLLLL makes sense haha. Thanks!!